Only one week before the inauguration, the euphoria about the upturn in the capitalist economy and the election of Clinton is beginning to dissolve. So much so that it's beginning to worry Clinton strategists — in particular incoming Cabinet members who have to deal with the critical economic situation.
In this connection Clinton dispatched Rep. Leon Panetta, D-Calif., his choice for budget director, to the Senate to present the president-elect's view of the government's gargantuan deficit. Panetta discussed his proposals to deal with it.
Panetta, it should be mentioned, has been the head of the House Budget Committee for four years. He has been in Congress 16 years. During that time he has earned a reputation as a hard-line reactionary toward much of the social legislation that Democrats generally regard favorably.
According to a Jan. 12 Associated Press report, Panetta told the Senate Budget Committee, "All of us are going to have to make some sacrifice." Of the deficit he said: "The problem is too great, so I'm going to have to take the approach that everything is on the table. ... I'm not promising anything at this point, because we're looking at everything in terms of a package."
"Everything" is the key word here. His refusal to rule out cuts in Social Security, Medicare, Medicaid and other domestic programs is a distinct reversal of what Clinton himself promised not so long ago.
Recall what Clinton promised at the Democratic National Convention when he took to the podium on July 16: "In the name of all those who do the work, pay their taxes, raise the kids and play by the rules, in the name of the hard-working Americans who make up our forgotten middle class, I accept your nomination for president of the United States. I am a product of that middle class and when I am president you will be forgotten no more."
The term "middle class" is bandied around so that everyone reads into it whatever they like. For instance, in the movie "Hoffa," the Teamster leader is made to say, "I raised them [1.2 million Teamsters] to the middle class."
This really means that through union organization, the workers won enormous concessions from the bosses in health care, retirement benefits and wages that raised their living standards. This is not to be confused with becoming part of the real middle class. The original meaning of the term middle class is something else altogether: the petty proprietors, highly paid white collar professionals, and those involved in the wholesale and retail trade who are not workers in the proper sense of the word.
Clinton and his principal economic advisers took up the nature of the capitalist crisis at a secret meeting earlier at a residence connected to the White House. The Jan. 4 Time magazine referred to this meeting: "In the early evening of Dec. 7, a small group of economic advisers met secretly with Bill Clinton at Blair House in Washington. Their message was depressing: the long-term outlook for the nation's economy is worse than the public appreciates."
The surest proof of this lies precisely in the conduct of the biggest, most powerful corporations in the U.S. At this writing, the General Motors board of directors is again meeting in an atmosphere of financial crisis. One would have thought their crisis was solved some months ago. But it is once again being discussed, and the issue is further cost-cutting. By this they mean "downsizing" the corporate structure and, inevitably, further layoffs.
It should not be forgotten that the Du Pont family has had a long-time interest in General Motors. The Du Ponts are interested in increasing profit through downsizing the corporation and moving into the field of international finance. The Du Pont family — despite its diversified empire including armaments, chemicals and whatnot — is not particularly concerned about auto production. They hope for easier pickings in international finance.
GM is undergoing a financial review. Time was that an IOU from General Motors — even in six figures — was considered as good as cash in the bank. That was a long time ago. It is not true today.
One only has to view the defensive posture GM executives took when facing a horde of financial analysts who attempted to pry open the specifics of the corporation's financial situation. According to the Jan. 11 Wall Street Journal, GM executives including G. Richard Wagoner, its chief financial officer, flatly refused to offer more "specifics about GM's finances at the analysts' meeting." They only went so far as to say that they are confident "GM can make good" on its "promise to have its North American operations break even before interest and taxes."
That's a big come-down from the years when the then-head of the GM board, C.E. Wilson, was able to boast to a Congressional committee that what's good for General Motors is good for America.
It all implies that the dismantling and "downsizing" at GM will continue unabated. And that is true for all the giant corporations in the U.S. Not just GM, IBM, General Electric and Eastman Kodak, but all along the line. The ruthless dismantling means vandalizing the corporate structures and ends in the ruthless displacement of workers — even including hundreds of thousands on the managerial level.
There are many examples of the marauding character of the restructuring plans of the huge monopolies, like Eastman Kodak in Rochester, N.Y., or what GM is doing to the Willow Run plant in Ypsilanti, Mich.
Ypsilanti city officials are attempting to block the GM plant from closing. The company wants to consolidate production of big rear-wheel-drive cars at its Arlington, Texas, plant and close the Ypsilanti plant this year. GM announced as early as February 1992 that it would embark on this vicious plan.
This is one of many cases across the country where the burden of the capitalist crisis is being shoved onto the shoulders of the working class. Resistance to it is a life-and-death matter, not only for the workers in these plants but for the working class and oppressed people as a whole.
None of these giant corporations is paying the slightest attention to the lofty promises made by the incoming Clinton administration. It's as though Clinton were addressing only the mass of people, not big business.
The Big Three automakers met Jan. 9, along with UAW President Owen Bieber, and made demands upon the incoming Clinton administration. Almost all the demands related to competition with Japan, and did not — so far as can be discerned from the capitalist press reports — include an iota of concern over the downsizing, layoffs and plant closings.
To this it must be added that the Wall Street Journal quoted Bieber as having said, "We are all in accord." A more crass example of class collaboration is scarcely possible — especially since the auto bosses are solidly in favor of the North American Free Trade Agreement, and the UAW is on record opposing it.
The gravity of the financial situation at GM has to be viewed in light of the financial review the board of directors ordered last November. A cryptic paragraph in the Jan. 11 Wall Street Journal pointed out the gravity of the situation: "Around the same time, the board initiated the financial review, which has involved GM's finance staff and J.P. Morgan & Co., the bank headed by GM board member Dennis Weatherstone, according to GM sources. The review is aimed at improving GM's cash management and determining whether the company's accounting practices are rigorous enough."
Cryptic as this appears, it nevertheless tells a great deal. The review was carried out not just by GM's finance staff but also by J.P. Morgan & Co. This is not just another bank. It is the advance guard of U.S. imperialism in the struggle for world domination to establish the U.S. capitalist class as the pre-eminent financial factor in the world monetary system — and to subordinate all rivals in France, Germany and in particular Japan.
It is true J.P. Morgan no longer plays the pivotal role in American finance capital it used to play before it was broken up during the Roosevelt administration. But it is nevertheless the premier bank in underwriting securities. It retains an empire of powerful informal connections all over the capitalist finance world of the U.S.
The chairperson of the board and chief executive of J.P. Morgan & Co., says the Wall Street Journal, is a General Motors board member, Dennis Weatherstone. The question is, who on the board of directors at General Motors is ordering new accounting practices and making them more rigorous? Who is pulling the GM corporate structure in another direction?
J.P. Morgan is involved in huge, worldwide currency operations, dealing in hundreds of billions of dollars. How does this affect the premier automaker, whose principal occupation is the production of automobiles and trucks?
If the influence of J.P. Morgan is of such gravity as to have a determining role in GM operations, its orientation would be strongly in the direction of downsizing GM's industrial empire and orienting it more in the direction of financial operations. It is a factor of potentially enormous significance not only for GM but for the other corporate giants that are inextricably linked to if not dominated by the big banks.
The big banks, it should not be forgotten, have become weakened by two important developments in the past few years. First, the so-called S&L scandal — really a major ripoff by the savings and loan banks. They had to be rescued, mostly by the big banks with the aid of the government.
The rescue operation has been underplayed in the capitalist press. But it was enormously costly and tended to weaken the imperialist banking establishment.
The other development is far more significant. It can be seen quite easily merely by casually examining the assets and liabilities columns of any bank, especially the big ones. After its cash deposits, government securities are any bank's principal assets.
However, the government securities, issued in the trillions of dollars, are simply IOUs from the government. And because of the huge deficit incurred by the federal government in the many years of unmitigated military expenditures, these IOUs have diminished in value.
Thus the connection between the government's huge deficit and its indebtedness to the banks should become as clear as crystal. The banks carry the government's indebtedness (IOUs) as their principal asset.
In other words, the giant banks' principal assets are government IOUs in the trillions of dollars. This cannot be emphasized enough.
As long as the government pays the interest on its IOUs and can roll over payment of principal, the apparent stability of the capitalist establishment seems assured. But the continuing rise in the government's deficit inevitably diminishes the value of the IOUs held by the banks. This cannot continue indefinitely, given the general instability of the capitalist world system.
The euphoria generated by the Clinton team's promise to cut the U.S. federal budget deficit in half may turn out to be based on a mere mirage. Then the Clinton administration will be faced with a choice: Either take regressive, reactionary measures and cut social services — which the bankers and the industrialists really want them to do — or aim their guns against the super-rich with the kind of social legislation that the masses of the population are expecting in order to improve their living standards. This is the dilemma the Clinton administration faces.
It is of paramount importance that the labor movement, the working class and the oppressed masses, in particular the vanguard elements, become aware of this situation. Mass struggle against the huge monopoly corporations, the so-called Fortune 500, must be conducted in the spirit of a revolutionary intervention against the core of the capitalist establishment — and against the capitalist government, which will surely come to its defense.
Thus, apparently local struggles such as those in Ypsilanti, Mich., and Rochester, N.Y. — so far away from the wheelers and dealers on Wall Street and in Paris, London and Tokyo — represent a real challenge to the capitalist establishment and its governing group.
Last updated: 15 January 2018